Retailers form group opposing a privatized lottery

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November 15, 2012 at 2:04 PM

Citing a potential shift in lottery sales from Main Street retailers to big-box wholesalers and online platforms, a coalition of small retailers and unionized workers has launched a grassroots campaign opposing the Gov. Chris Christie administration's plans to privatize the state lottery.

"Everyone can agree the New Jersey Lottery is one of the most successful programs, in terms of lottery throughout the country. The reason for that has been the brick-and-mortar retailer, who has been out there on the ground floor for decades promoting the system and making it a success," said Satish V. Poondi, director of legislative affairs for Green Brook-based Asian-American Retailers Association, which created the coalition with the Communications Workers of America. "We welcome any move by the state that's going to help us promote our lottery products and increase sales, but we're opposed to anyone taking the playing field and manipulating it to a foreign competitors' advantage."

In 2011, the state grossed $2.8 billion in lottery revenue, though it believes contracting its sales and marketing operations to a private company could bring in more revenue and launch New Jersey's first Internet lottery games.

"One of the main concerns that was factored into our RFP is that, right now, the base of players is sort of static, particularly with younger people not playing lottery games as much as the older crowd," a Treasury spokesman said. "The question we want the contractor to answer is, 'How can we reach out to new retail outlets and different types of retail outlets, and do a better job of reaching young people?' — and to do that, they may consider online sales."

The spokesman said the four companies that met with New Jersey officials in September still plan to submit bids to the Division of Purchase and Property by the Dec. 4 deadline, which he said was extended from today's original deadline for proposals.

Of those four companies, the Big Gamble NJ campaign is most opposed to Lottomatica subsidiary GTECH, which has been supplying lottery technology to New Jersey since 1984. Poondi said the Providence, R.I., company — which has run the Illinois lottery in a consortium with Scientific Games since July 2011 — "promised bells and whistles in Illinois, but now it's underperforming, and we can expect to face the same disappointment here in New Jersey if they get the contract."

GTECH did not return a message from a reporter on deadline.

"I've talked to dozens of retailers across the state of Illinois to get an idea of what would happen in New Jersey, and it's clear that small businesses trying to enter into the market will be blocked from doing so, because if you have a company administrating brick-and-mortar sales that has its own Internet sales, it may not look favorably at any additional competition," Poondi said.

According to the state's RFP, lottery tickets are currently sold through about 6,500 retailers statewide. The winning bidder is required to make an upfront payment of $120 million to the state in return for a 15-year contract, though the Treasury spokesman said "if the contractor fails to meet their revenue targets over two years time, the state can terminate the contract — and if we get bids on Dec. 4 that we don't think are credible, we don't have to proceed with the award."